Direct marketing
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Direct marketing is discipline within marketing that involves the planned recording, analysis and tracking of individual customers' (business-to-business or consumer) responses and transactions for the purpose of developing and prolonging mutually profitable customer relationships.
Direct marketing is a form of marketing that attempts to send its messages directly to consumers, using "addressable" media, such as mail and (increasingly) email. Therefore, direct marketing differs from regular advertising in that it does not place its messages on a third party medium, or in the public market, such as a billboard or a radio commercial would. Instead, the marketing of the service or commodity is addressed directly to the target customer.
Direct marketing is attractive to many marketers, because in many cases its effectiveness can be measured directly. For example, if a marketer sends out one million solicitations by mail, and ten thousand customers can be tracked as having responded to the promotion, the marketer can say with some confidence that the campaign led directly to the responses. By contrast, measurement of other media must often be indirect, since there is no direct response from a consumer. Measurement of results, a fundamental element in successful direct marketing, is explored in greater detail elsewhere in this article.
While many marketers like this form of marketing, it is sometimes criticized for generating unwanted solicitations, which are sometimes referred to as junk mail and spam. However spam and bulk mail drops are not true forms of Direct Marketing as recipients are not identified as prospects by any form of selective criteria.
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Direct marketing channels
Any medium that can be used to deliver a communication to a customer can be employed in direct marketing. Direct marketers often refer to such media as "addressable" to distinguish them from "mass" media, such as television, radio, and print.
Direct mail
Probably the most commonly used medium for direct marketing is direct mail, in which marketing communications are sent to customers using the postal service. In many developed countries, direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. In the United States and United Kingdom, for example, there are bulk mail rates that enable marketers to send mail at rates that are substantially lower than regular first-class rates. In order to qualify for these rates, marketers must format and sort the mail in particular ways - which reduces the handling (and therefore costs) required by the postal service.
Direct mail permits the marketer to design marketing pieces in many different formats. Indeed, there is an entire subsector of the industry that produces specialized papers, printing, envelopes, and other materials for direct mail marketing. Some of the common formats, include:
- Catalogs: Multi-page, bound promotions, usually featuring a selection of products for sale.
- Self-mailers: Pieces usually created from a single sheet that has been printed and folded. For instance, a common practice is to print a page-length advertisement or promotion on one side of a sheet of paper. This is then folded in half or in thirds, with the promotional message to the inside. The two outside surfaces are then used for the address of the recipient and some "teaser" message designed to persuade the customer to open the piece.
- Postcards: Simple, two-sided pieces, with a promotional message on one side and the customer's address on the other.
- Envelope mailers: Mailings in which the marketing material is placed inside an envelope. This permits the marketer to include more than one insert. When more than one advertiser is included, this is often called "marriage mail". Valpak is one of the largest examples of a marriage mail service.
- Snap Mailers: Mailers that fold and seal with pressure. The sides detach and the mailer is opened to reveal the message.
- Dimensional Mailers: Mailers that have some dimension to them, like a small box.
- Intelligent Documents: Programmable mail pieces built dynamically from database information, and printed digitally for faster production.
Direct Mail (junk mail and admail)
Image:Junk mail collection.jpg
Although bulk mail, junk mail, and admail are, strictly speaking, not synonyms, the terms are used in common parlance to refer to advertising circulars, free trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail to homes and businesses. The term "junk" is usually used when someone receives an item of mail that is untargeted or not relevent to them. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer and travel and tourism industries.
Advertisers often call it "targeted mailing", as mail is usually sent out following database analysis. For example a person who likes golf may receive direct mail for golf related products or perhaps for goods and services that are appropriate for golfers. The USPS prefers to call it "advertising mail" (admail for short), noting that some people might find offers of interest to them in it. [1]
Some people respond positively to direct mail advertising and find useful goods and services on offer. Traditionally, this was more true in rural areas where people had to travel many miles to do their shopping and direct mail and mail order shopping was a major convienience. However, many people dislike it, in the same way as with telemarketers' calls and e-mail spam, and some jurisdictions like the US have laws requiring junk mailers to withhold their offerings from residents who opt out.
Many consumers, as well as environmental protection groups, are concerned about the environmental impact generated by junk mail. According to 50 Simple Things You Can Do To Save The Earth:
- Each year, 100 million trees are used to produce junk mail;
- 250,000 homes could be heated with one day's supply of junk mail; and
- Americans receive almost 4 million tons of junk mail every year. [2]
An organization called the Mailing Preference Service allows people in the United Kingdom to register with them for free and they will ensure those people's addresses are removed from 95% of mailing lists. A similar service is provided by Junkbusters for removal from the USA's Direct Marketing Association members' and other mailing lists.
Unaddressed Mail (Door Drops / Door to Door)
Delivery of unaddressed items through letterboxes ("direct mail without the stamp") takes place in large numbers throughout the USA and EU. Deliveries are either made via the postal service, independent delivery companies or local newspaper publishers.
It is a lower-cost alternative to direct mail and therefore can produce a lower cost per response for the advertisier. It can be used as part of a mixed media campaign, e.g. with TV or Radio.
A recent study in the UK by CACI found that "Door Drops" generated the highest purchasing results when compared to Direct Mail, Phobe and Email. (10.8% Unaddressed, 8.9% Direct Mail, 8.3% Email, 3.5% Phone - for single purchases). Even for repeat purchases it was level at 12.9% with Email.
It has shed the "mass mailing" image over recent times as targeting improvements have meant that advertisers can now reach a more precise audience than before.
Telemarketing
In telemarketing, marketers contact the customer via telephone calls. One of the original attractions of telemarketing was the speed with which marketing campaigns could be executed. While direct mail is cost-effective, it is relatively slow, since marketing pieces must be shipped by mail.
Telemarketing also lends itself well to products and services that are complex to buy, such as switching to another telephone company or purchasing a financial service. Certain types of transactions may also be subject to government regulation; telemarketing permits a company representative to walk the customer through the purchase, while ensuring compliance with laws.
While not as varied as direct mail, telemarketing can take several forms.
- Outbound telemarketing: Calls made to customers. By using autodialers and predictive dialers, call centers can call a large number of customers.
- Inbound telemarketing: Promotions and offers made when a customer calls the center.
- Voice messages: A number of firms employ special technology to call customers' answering machines.
In the United States, this medium became increasingly popular in the 1990s, as telephone deregulation and competition among telecommunications companies led to decreased costs.
Template:Main Email is proving to be an increasingly popular medium for direct marketers, in large part because of its relatively low cost, but also because customer responses can be generated rapidly. When sent to customers who have given their permission to receive such marketing material, email marketing can be a highly cost-effective method of promotion. However, when performed without permission, or used to send inappropriate messages, the result is e-mail spam, which most Internet users and administrators consider an abuse of network resources and a nuisance. Spam is prohibited by the appropriate-use policies of almost all Internet service providers and increasingly is the subject of laws and regulations aimed at curbing the practice.
Emerging channels
Two new media have received attention from analysts and industry promoters as potential channels for delivering direct marketing. In both cases, their use has not yet become as widespread as established channels, and both still have technological hurdles to overcome. And the longer-term question of whether they will be prone to such abuses as spam may not be answered until wider adoption of the media by marketers.
- Digital cable - For many years, cable television has been promoted as an emerging addressable medium, although no large-scale implementation that would permit highly targeted direct marketing has been successful. Digital cable is being held up as the technology solution that will make the delivery of personalized marketing content via television possible.
- Wireless - Much as with cable, wireless service providers have promised delivery of direct marketing to cell phones and other wireless devices, but early efforts were sporadic. More recently, and particularly in Europe where consumer adoption has been higher than in the United States, marketers have begun seeing success at delivering marketing communications to wireless devices. To date, much of this marketing was constrained to text-based messages sent using the Short message service, or SMS, but the roll-out of 3G technology holds the promise of delivering richer content, and therefore gaining more interest from marketers.
- Internet (banner) ads - Web pages often contain direct market advertisements in the form of banner ads. Often, these ads could be considered indirect (in cases where the company serving the ad is other than the company selling the product or service). But, in many cases, companies like yahoo and others serve millions of ads for their own services.
Direct marketing typically relies heavily on computer databases and is therefore an example of database marketing. Most direct marketing is done by companies whose only function is to manage and perform direct advertising, rather than by the advertised entity itself. The services provided by these companies includes the maintenance of mailing lists and the production of the direct mail pieces themselves in a factory called a lettershop.
Direct marketers have been long-time customers of computer databases, and they often have very sophisticated criteria of inclusion and exclusion in their mailing lists. Recently, political campaigns have begun to appropriate the methods of direct marketers (or to employ direct marketing firms) to raise money and create activism.
Direct response
A related form of marketing is direct response marketing. In direct marketing, the marketer contacts the potential customer directly, but in direct response marketing the customer responds to the marketer directly. Its most common form today is infomercials. They try to achieve a direct response via television presentations. Viewers respond via telephone or internet, credit card in hand. Other media, such as magazines, newspapers, radio, and e-mail can be used to elicit the response, but they tend to achieve lower response rates than television.
Order forms or coupons in magazines and newspapers are another type of direct response marketing. Mail order is a term, seldom used today, that describes a form of direct response in which customers respond by mailing a completed order form to the marketer. Mail order is slow and response rates are low. It has been eclipsed by toll-free telephone numbers and the internet.
Legislation
In the United States, the United States Postal Service maintains that direct marketers pay the majority of the costs of mail. Bulk mail thereby subsidizes low cost stamps for letter, magazine, and book mailing. No such compensatory relationship exists with e-mail or faxes, which require the receiver to pay for bandwidth, storage space, or paper and toner, and some of the solutions to e-mail spam in the United States have involved instituting a freight cost on mass e-mail to make it productive. Such solutions have not been universally lauded, as they leave the recipients of unsolicited e-mail with the problem of storage and bandwidth consumption and would increase costs to companies that send only solicited mass mailings.
The United States telemarketing industry was affected by a national do-not-call list, which went into effect on October 1, 2003. Under the law, it is illegal for telemarketers to call anyone who has registered themself on the list. People can register for the list on the web at donotcall.gov. After the list had operated for one year, over 62 million people had signed up [3]. The telemarketing industry opposed the creation of the list, but most telemarketers have complied with the law and refrained from calling people who are on the list.
See also
External links
- The Direct Marketing Association's Consumer page, with links for US residents to remove their contact information from DMA's telephone, email, and postal mail lists
- The UK's Mailing Preference Service, for UK residents to remove their postal mail address from marketing lists
- The UK Direct Marketing Association
- Junkbuster's How you can gain control of your mailbox (Encyclopedic information and effective advice for consumers)
- Form to block junkmail (United States) (PDF file)de:Direktwerbung
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